Daily Focus

4 April 2018

Today’s Strategy >> Continue to get on defensive and domestic plays Yesterday's market: The SET decreased, as expected, due to

negative sentiment. To elaborate, crude tumbled, while there were concerns over trade war. In Thailand, the National Legislative Assembly has submitted a request for the Constitutional Court to rule on a law governing election of members of the House of Representatives. Moreover, the power plant sector plunged after there were news reports that the government would slow their purchase of electricity generated by renewable energy. Selling came mostly from domestic institutions and foreign investors who recorded a net sell position in equity by Bt1.1bn and Bt500mn, respectively. Today's outlook: We expect the SET to move sideways. Moreover, we believe it will continue to be highly volatile due to the concerns over trade war, which have an impact on market sentiment. According to the latest development, the U.S. has disclosed a list of 1,300 Chinese imports that it will impose import duty, while China prepares for its retaliation shortly. Although we believe trade wars will not take place, markets will be hit by such news and concerns throughout this month. In this regard, we maintain our call for investors to bet on defensive and domestic plays that do not have specific downside risks because they should be safe and outperform the market. Strategy: Continue to bet on defensive and domestic plays. Top picks in April: BDMS, CPN, ERW, KBANK, SYNEX

Fund Flow Yesterday, international funds flowed out of regional equity markets by US$394mn. To elaborate, foreign investors registered a net sell position in Taiwan by US$309mn and Thailand by US$15mn. Looking ahead, funds look set to continue to stream out of the region due to the concerns over regional trades. However, volume might decrease after U.S. equity markets sharply increased.

Market Summary (Bloomberg) 3-04-18 %1 Day %WTD %MTD 1,765.24 -0.96 -0.62 -0.62 SET 1,165.17 -0.86 -0.56 -0.56 SET50 Daily turnover (Bt mn) 62,148.30 17,725.67 Market cap (Bt bn) 18.17 Market P/E (x) 2.05 Market P/BV (x) 2.87 Market yield (%) Forward P/E (Bloomberg) 2017E 2018E 15.90 14.48 SET 12.19 10.64 China 11.61 10.50 Hong Kong 15.90 14.28 Indonesia 9.47 8.85 Korea 17.89 15.88 Philippines 13.87 13.07 Taiwan 16.75 15.16 S&P500 Investors Summary (SET) 3-04-18 Buy Sell Net Foreign (Bt mn) 21,750.30 22,228.69 -478.39 8,584.46 8,369.26 215.20 Proprietary (Bt mn) 6,887.27 8,000.34 -1,113.07 Local Institution(Bt mn) 24,926.31 23,550.04 1,376.27 Retail (Bt mn) SET50 Index Future – Contract (www.tfex.co.th) 3-04-18 Buy Sell Net 29,991 28,322 1,669 Institution 23,380 24,107 -727 Foreign 79,799 80,741 -942 Local Top 5 Short sell Turnover THBmn (SET) Stock 3 Apr 2 Apr 30 Mar 29 Mar 28 Mar EA 436.78 148.86 118.78 165.15 67.39 PTT 393.93 24.81 212.96 485.93 309.81 SCB 53.89 0.04 5.16 23.80 99.22 KTC 44.82 22.27 56.25 38.22 14.56 IRPC 40.00 3.10 7.99 26.73 3.27

2018SET Target : 1900

FINANSIA's Pick >> INTUCH <<   

We rate INTUCH as BUY at our TP of Bt67.5. In 1Q18, we expect profit to be strong at Bt3.9bn (+115% Q-Q, +22% Y-Y), in line with ADVANC and THCOM which booked extra gain from sales of CSL. At the current share price, INTUCH is sharply undervalued. Specifically, it offers a high discount of 28%, even from just the value of ADVANC. This means that at the current share price INTUCH does not include the value of other businesses, i.e. THCOM and its new startup. What's more, the counter has increased only 2.2% YTD, lagging behind ADVANC which +8.4% over the same period. Given that, its upside is wider and more attractive, making the counter a suitable safe-haven during market volatility.

Today's Highlights (-) Power plant sector. The recent losses are not attributed to specific negative factor. They can be blamed on an industry-wide risk after the Energy Minister viewed that purchase of electricity made renewable energy should be put off for the time being. Without new capacity, there will be no growth for power plant counters. Hence, they should not trade on a high PE. Nonetheless, some of them have decreased to where they are below their fundamentals because their power plants are still operating as normal. They comprise BGRIM (TP Bt32), EA (TP Bt47), GUNKUL (TP Bt5), and TPCH (TP Bt18). (+) TMB. We have raised our rating on TMB from HOLD to BUY at our TP of Bt3.3 after it has decreased to where it now implies attractive upside due to concerns over its CoF and deposit base which might be affected by other banks' decision to remove their fund transfer fee. However, we believe TMB will see limited impact. The bank is the first and the only one that has never imposed a fee. Moreover, it has a strong platform that answers customer demand. In 2018, TMB's fee income looks set to grow thanks to its bancassurance and loan-related fees which were low last year. We stand by our 2018E net profit at Bt10bn (+16% Y-Y). In 1Q18, we expect net profit to be strong at about Bt2.3bn. It's flat Q-Q but +8% Y-Y, which is higher than the sector's average. (+) HMPRO. In 1Q18, net profit looks set to grow strong. To elaborate, we expect it to +25% Y-Y to Bt1.3bn thanks to same-store-sales growth (SSSG) which is anticipated to grow for the third quarter in a row. Moreover, its HMPRO Expo continued to be well received. As a result, we expect revenues to continue to grow, while gross margin is predicted to see strong development thanks to a change in product mix and more efficient sourcing. In the big picture, HMPRO views that purchasing power is flat in the provinces, while it continues to recover strongly in Bangkok and its vicinity. Looking ahead, performance is poised to sharply improve in 2Q18 and 4Q18 because they are the commerce industry's high season. We stand by our 2018E net profit at Bt5.9bn (+20% Y-Y) and retain our BUY rating on HMPRO at our TP of Bt15.5. (+) VGI. This company will invest in a 25.1% stake in a media company in Malaysia. Although the purchase is positive because it offers synergy in terms of advertising sales, impact will not be significant. However, the counter has sharply increased to reflect such news and its fiscal 4Q18 profit (calendar: January-March 2018) which looks set to +30-35% Q-Q. Moreover, although we are looking to revise up our profit estimate and fiscal 2019 TP of Bt6.3, the stock currently trades at a PE of 53x, which is fully valued in our view. Hence, we recommend that investors sell to lock in profit. (+) IT. IT's "IT. City Bacon" has won the RoV Pro League S1 competition at Garena World 2018. As the winner, the team received a cash prize of Bt3mn and a right to compete in the Arena of Valor World Cup in Los Angeles. This reiterates its leadership in Thailand's gaming market, which has a value of over Bt10bn and grows at an average annual rate of 30%. Moreover, sales of gaming devices accelerated at an event held during March 31 - April 1. In 1Q18, we expect profit to +9% Q-Q, +145% Y-Y to Bt15mn. The counter currently trades at 2018 PE of just 10x, not even half of COM7's of 28x. It offers an annual dividend yield of 6%. We rate IT as BUY at our TP of Bt6.9. Factors to watch Apr 4 - US: ADP Private-sector Employment Report (Mar) - Eurozone: Inflation (Mar) Apr 5 - Thailand: Consumer Confidence Index (Mar) - Eurozone: Retail Sales (Feb) Apr 6 - US: List of Chinese products subject to import duty to be released, Non-farm payrolls (Mar) Contact person : Jitra Amornthum Register : 014530 Tel: 02-646-9966 www.fnsyrus.com Line : @fnsyrus FB: FINANSIA SYRUS SECURITIES

Page 1 of 2

4 April 2018

Cash Balance (Col= excluded from credit limit ; xNet= prohibit Net settlement)

Cash Balance (Col= excluded from credit limit ; xNet= prohibit Net settlement)

Stocks (Rank A-Z)

Stocks (Rank A-Z)

Start Date

End Date

(T/O)

05/03/2018

12/04/2018

KOOL

(T/A)

21/03/2018

10/04/2018

SOLAR

(T/O)

26/03/2018

12/04/2018

TITLE

(T/O)

19/03/2018

27/04/2018

Start Date

End Date

FINANSIA Daily Focus

KCM

DISCLAIMER: This report has been prepared by Finansia Syrus Securities Public Company Limited (FSS). The information herein has been obtained from sources believed to be reliable and accurate; however FSS makes no representation as to the accuracy and completeness of such information. Information and opinions expressed herein are subject to change without notice. FSS has no intention to solicit investors to buy or sell any security in this report. In addition, FSS does not guarantee returns nor price of the securities described in the report nor accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Investors should study this report carefully in making investment decisions. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of FSS. Investment in securities has risks. Investors are advised to consider carefully before making investment decisions. Finansia Syrus Securities Public Company Limited may act as market maker and issuer of DWs. The company may prepare the research reports on those underlying securities. Investors should carefully read the details of the derivative warrants in the prospectus before making investment decisions.

Page 2 of 2

Daily Focus

Apr 4, 2018 - concerns over its CoF and deposit base which might be affected by other banks' decision to remove their fund transfer fee. However, we believe TMB will see limited impact. The bank is the first and the only one that has never imposed a fee. Moreover, it has a strong platform that answers customer demand.

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